Banks: the key to creating relationship primacy with SMEs

In conversation with Nick Reid

There's no doubt that traditional banks and financial institutions want to help small business (SMEs), especially in these challenging macroeconomic times. They're looking to support SMEs with growth, the moments that matter and to ensure they beat the survival rate. 

There's a particular interest from banks around micro-businesses, defined by the FCA as typically having a turnover of less than £6 million per year, less than 9 employees and importantly, no relationship manager within their primary business bank.  

Q: How should banks navigate relationship primacy with SMEs?

We can see that banks are beginning to accept the fact that engaging with this segment must to be achieved in a couple of different ways, primarily through a combination of physical (or, human) and digital touch-points. 

Q: How can digital tools enhance the banking and customer experience for SMEs?

 Digital tools support businesses with their transactional, everyday banking. However, these can be further enhanced by adding services that help them to get paid quicker. There's a lot of stats out there right now about how long it takes these small businesses to get paid. In a recent article by The Times, the delay in payments to small businesses currently stands at 7.3 days – its highest level since the start of the pandemic. 

SMEs also value tools that help them save time. These types of businesses are notoriously time poor, and any time they spend on actions that do not add value to their business, such as financial admin, is time that they're not spending on marketing, selling and promoting their goods and services. So, saving time and getting paid faster are the two key things that digital banking propositions can really help with, which could help to foster relationship primacy. 

Q: What do we hear from our own end users about how can banks utilise human interactions to address the needs of SMEs?

The human element is becoming more crucial from the banks’ perspective. It’s through this human interaction that banks can truly understand the needs of their SME customers gleaned from a gold mine of data that can be retrieved from these human interactions

From our own human interactions with end-users, this combination of needing digital and human touch-points, as well as services that saves them time and money, comes up time and time again.  Services that require SMEs to spend time combing through data, analysing what this means for their business or that requires them to go to an advisor for more insights, are things that they just don’t have time for, and therefore they do not need this.

Our end-users also tell us that having a view of their current and future cash flow position, taking in real time data from other sources (which would otherwise take up a lot of time) is something that could really help them on their journey to growth; as well as the provision of tools that allow these SMEs to do something about their cash flow position - which could open up conversations between the bank and the SME about growth capital finance.

If, for example, a business is in the fortunate position of having surplus idle deposits and the ability to sweep into a high interest business savings account, or if they're in the less fortunate position of being low on cash, banks can open up the conversation (human-based interactions) with the SME to explore ways they can support, as well as offering features that enable SMEs to send or resend invoices and/or outstanding invoices to customers within the banks’ digital proposition which can also support the SME in their journey to growth.

This is a great example of how combining human interactions and digital services can lead to a mutually-beneficial SME-to-Bank relationship: the needs of the SME are met and revenue opportunities for the bank are unlocked.

Q: What is the key takeaway for banks aiming to build strong relationships with SMEs?

The fusion of human and digital services is key for banks who are striving to achieve relationship primacy with SMEs. Combining digital tools that expedite payments and save time, along with the personalisation of human interactions which provide banks with deeper insights into their customers, banks can better meet the unique needs of small businesses. This approach fosters stronger relationships, provides banks with an additional competitive edge and supports SMEs in their journey to growth. 

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With a unique combination of technology, customer engagement and marketing, a partnership with BankiFi can help you to achieve relationship primacy amongst your SME customer base. The result? A growth in deposits and more opportunities to lend.